Friday June 30th, 2006

Fourth of July gasoline prices reach record highs...Trial of former Dynegy and El Paso traders postponed five days...U.S. House votes to end quarter-century offshore drilling ban...

Fourth of July holiday motorists will find gasoline more expensive in Texas this weekend. The weekly AAA Texas gas price survey released today finds retail regular, self-serve gasoline prices averaging $2.80 per gallon across the state. That's two cents higher than last week and a July 4th record for Texas. The national average price at the pump is $2.87--up two cents. Auto club spokeswoman Rose Rougeau says more than 3.3 million Texans are expected to travel for the holiday. The state's most expensive gasoline is in the Galveston-Texas city and Houston areas, where regular, self-serve averages $2.89 per gallon. That's a penny higher than last week in Galveston but just a fraction of a cent higher in Houston. The cheapest fuel is in Corpus Christi, where regular's averaging $2.60 per gallon. That's seven cents more than last week.

The roads and airports will likely be pretty crowded this weekend. AAA says over 40 million people will travel over the Independence Day weekend. That's a record. AAA spokesman Mantill Williams says more than 34 million of those holiday travelers will be going by car. He says high gas prices may mean people make some plan changes, but the cost won't cancel trips. Williams says the floods in the northeast likely won't have a big impact on travel. An air travel expert predicts "one of the heaviest if not the heaviest'' July 4th weekends ever. But Terry Trippler of Travel Passport says there shouldn't be too much of a "crush of people'' at airports. He says many people will take a longer vacation because the 4th falls on a Tuesday.

The trial of a pair of former energy traders in Houston has been delayed for five days so the defense can review new documents the government provided this week. Former Dynegy trader Michelle Valencia and former El Paso Corporation trader Greg Singleton are charged with reporting bogus transactions. Prosecutors say the fake reports could have skewed natural gas index prices. The two are the first of a string of traders to go to trial after a lengthy federal investigation of errant trading practices. Both are accused of reporting fake data to industry publications that use the information to calculate natural gas index prices. The publications--such as Inside FERC Gas Market Report and Natural Gas Intelligence--calculate prices based on information supplied by traders or their companies. Those companies, in turn, used those prices in trading. Valencia and Singleton have pleaded not guilty, and few if any of the fake trades were actually part of the publications' calculations. But under federal law, the government needs only prove fake trades were reported--not whether they were published or affected the markets. Jury selection is set for July 10th.

Trailers nearly 1,000 feet away from the blast site were damaged during a deadly Texas City BP plant explosion. Data released today also indicates the fiery accident injured workers in trailers almost 500 feet away. In all, 170 people were hurt. The U.S. Chemical Safety and Hazard Investigation Board previously said all 15 deaths in the March 2005 accident happened in the two trailers closet to the blast site. One was as close as 121 feet. But the newly released data gives a better sense of the explosion's impact. Two workers in one trailer 479 feet away were hurt. Trailers 927 and 952 feet away were damaged. BP spokesman Ronnie Chappell says the company has moved more than 200 trailers near the manufacturing section of the unit. A new policy creates a zone in which occupied temporary buildings won't be allowed.

The U.S. House has voted to end a quarter-century offshore drilling ban. The measure also would allow energy companies to tap natural gas and oil beneath waters from New England to Alaska. The bill's prospects in the U.S. Senate are uncertain. The bill, passed by the House yesterday, also would revamp how the federal government shares oil and gas royalties with states, producing a windfall for four Gulf states--Texas, Louisiana, Mississippi and Alabama. The eastern and western Gulf of Mexico produces virtually all of the country's offshore oil and gas. Under the bill, the share of royalties to states would increase to 50 percent over ten years and eventually could go as high as 75 percent. States currently get less than five percent of royalties from offshore oil and gas leases in the central and western Gulf.

A 47,000-barrel oil spill into a southwestern Louisiana shipping channel is blamed on a leak from a refinery. The Coast Guard calls it a major spill. The June 19th accident at a Citgo Petroleum Refinery in Lake Charles forced the closure of the Calcasieu Ship Channel. About 11 miles of the channel remained shut down today. The entire 40 miles to the Gulf of Mexico had been closed. The Coast Guard says about 31,000 barrels have been cleaned up so far. Authorities describe the spilled product as "waste oil'' left over after the refining process. Citgo says oil flowed over the tops of two holding tanks when rainstorms overwhelmed the tank pumps. An earthen berm failed to contain the oil. The Coast Guard is investigating the cause of the berm's failure.

Regulators are being asked to block electric companies from disconnecting service to the elderly and other vulnerable customers during hot summer months. The request has gone to the Public Utility Commission in Austin. The Office of Public Utility Counsel seeks to ban utilities from dropping service for certain residential customers who didn't pay their electric bills. The moratorium would end September 30th--after the hottest summer months. A PUC spokesman says the panel will review the request. The next PUC meeting is scheduled for July 20th. If adopted, the rule would apply to those over 65 and those who could develop life threatening conditions with no electricity.

Billions of military dollars are being spent on the war in Iraq. But some Army posts back home can't afford to pay the electricity bill or cut the grass. The Army's Installation Management Agency is $530 million short of what it needs to fund 117 garrisons at posts in the U.S., Europe and Asia through October 1st. At Fort Sam Houston in San Antonio, officials haven't been able to pay a $1.4 million-a-month electric utility bill since March. That's prompting the utility system to mail out 1,300 disconnection notices for many of the post's administrative buildings. Legislation Congress approved June 15th includes $722 million for the Installation Management Agency. Fort Sam Houston's garrison commander, Colonel Wendy Martinson, doesn't know how much Fort Sam will get. She expects it'll be enough to pay the $4.6 million electric tab. But it won't save the jobs of about 100 contract workers she had to let go.

A dozen janitors have sued 14 Target stores in Texas, alleging widespread overtime and minimum wage violations. The suit filed in U.S. district court in San Antonio yesterday names as defendants nine Target stores in San Antonio and five in Austin and Oklahoma-based Jim's Maintenance and Sons. The suit alleges Target and Jim's jointly employed the workers who were required to work up to 70 hours a week with only one day off every other week. The workers, who filled overnight shifts, say they didn't get overtime pay. They also say their semiweekly wage rates in many cases fell below the minimum wage of $5.15 per hour. Plaintiffs attorney Joseph Berra says they were underpaid by an average of about $220 per month. A Target statement says the Minneapolis-based company can't comment on the lawsuit because it hasn't been served. But it says target doesn't have a relationship with Jim's Maintenance and Sons.

Americans' income kept pace with spending last month, but slipped from April's levels. The Commerce Department reports both personal incomes and consumer outlays were up four-tenths percent in May. The income figure was a little higher than analysts had forecast, while the spending number matched expectations. Both were down from gains of seven-tenths the month before. Meanwhile, personal savings as a percentage of disposable personal income came in at a negative 1.7 percent. The savings rate has been in the red now for 12 straight months. Personal savings may be near zero or negative when spending is financed by borrowing.

Media reports say the University of Michigan's full-month report on Consumer Sentiment rose to 84.9 in June from 79.1 last month. Economists had forecast a reading of 82.4. In addition, the Index for Consumer Expectations is said to have moved to 72 from 68.2 in May, while the Current Conditions Index hit 105, versus the prior month's 96.1. The University of Michigan report is released only to subscribers.

A federal jury in Chicago has found a former Waste Management finance chief liable for civil fraud and other violations officials say cost investors more than $6 billion. The jury deliberated a day and a half before returning its verdict against James Koenig. U.S. Securities and Exchange Commission attorneys are expected to ask that Koenig be required to pay a substantial penalty. They're also expected to ask that he be barred from serving as an officer or director of a publicly traded company. A status hearing is set for July 17th. Koenig maintained throughout the case that his accounting of the company's earnings had been completely accurate. The corporate fraud allegations were the biggest ever brought by the government when the case was filed in March 2002. Since then, they've been surpassed by the Worldcom scandal and others. Houston-based Waste Management restated its earnings by $1.7 billion in 1997 after new management took over.

Valero GP Holdings said today it's expanded its initial public offering to 17.25 million units. That's from a previous proposed size of 16.5 million units, according to an amended filing with the Securities and Exchange Commission. The San Antonio-based company also said in an amended filing with the Securities and Exchange Commission that it expects the price range to be $22 to $24 per unit. Valero GP Holdings said the units have been approved for listing on the New York Stock Exchange, subject to official notice of issuance, under the symbol "VEH." Valero GP Holdings is currently owned by subsidiaries of Valero Energy.

Consumer-products manufacturer STRONG>Kimberly-Clark says it will cut another 150 jobs at its operations in Neenah, Wisconsin. The job cuts will occur over the next nine months. The Irving-based company already announced earlier this year it would eliminate about 500 jobs when it closes a plant in the town of Menasha. The company also says it will sell or close its Neenah Nonwovens Plant, where about 165 people work. The maker of Kleenex tissues and Huggies diapers wants to reduce payroll by ten percent or 6,000 jobs by 2008.

Baker Hughes in Houston today reports the number of rigs actively exploring for oil and natural gas in the U.S. this week fell by three--to reach 1,666. One year ago the rig count was 1,370. Texas lost six rigs.

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